The Overlooked Economic Loss –
The Value of Household Services by Alison D. Kohler
Alison D. Kohler (Spence, Kohler, & Christie, P.A., Towson) received her J.D. Magna Cum Laude from Georgetown University Law School. She serves as Treasurer on the Board of Governors and is a member of the President’s Club as a Founder. She currently serves as Chair of the Membership Committee and has previously served as chair Fundraising Committee. She is currently a member of the Executive Committee and the Legislative Committee. She was a founding Director and interim President of the Gary I. Strausberg Foundation, Inc. Ms. Kohler has previously served on the Executive Committee of the Bar Association of Baltimore City and the Board of Governors of the MSBA and was Past President of Executive Women’s Network. She represents seriously injured children and adults in the areas of medical malpractice, premises and product liability, negligent security, disability insurance, and general tort litigation.
I fell in love with using a client’s house-
hold service loss to increase economic damages about 10 years ago. At that time, I represented a 55-year-old woman who had been a homemaker for her entire married life. Although her children were grown, before her disabling injury she still worked hard at several activities around the house. Much to my surprise, when the economist expert valued my client’s household services, she had an economic loss of over $200,000, despite the fact that she did not work outside the home. Since then, I routinely consider whether a loss of household services claim should be made. The theory behind claiming a loss of household services is that individuals make valid and recognizable contributions through their efforts at both paid and unpaid work. When a plaintiff or a dece- dent is no longer able to perform some or all of the work they previously performed around the house, that loss has an identi- fiable value which can be calculated. While the methods of valuing household service losses have been debated among economists1
, the Maryland courts have
long recognized that a household services loss is a pecuniary claim for damages. As early as 1939, the Court of Appeals recognized that the loss of the value of household services performed by an indi- vidual is a proper element of damages. See Industrial Service Co. v. State, 176 Md. 625, 635, 6 A.2d 372, 376 (1939). The Maryland Courts have consistently rec- ognized household service losses since that time. See, e.g., Terry v. O’Neal, 194 Md. 680, 690-91, 72 A.2d 26, 30 (1950); Hughes v. Carter, 236 Md. 484, 486-87,
1
See, e.g., Economica Ltd’s., Brown, The Valuation of Household Services — Con- ceptional Issues, published in The Expert Witness Newsletter, Winter, 1996, Vol. 1, No. 4, at
http://www.economica.ca/ ew14p4.htm; and Tierney, Assessing the Value of Household Services Through a Functional Vocational Analysis, published by Case Law Economics, Inc., at http://
www.VocEcon.com.
10
204 A.2d 566, 568 (1964); Sun Cab Co. v. Walston, 15 Md. App. 113, 142-43, 289 A.2d 804, 820-21 (1972), aff ’d, 267 Md. 559 (1973); Edmonds v. Murphy, 83 Md. App. 133, 169-70, 573 A.2d 853, 871 (1990), aff ’d, 325 Md. 342, 601 A.2d 102 (1992); and United States v. Searle, 322 Md. 1, 6-7, 584 A.2d 1263, 1266 (1991).
Valuation Methods For Household Services The Maryland courts seem to have ap-
proved at least two methods of valuing lost household services. The first is to use an economist to value the loss. Edmonds v. Murphy, 83 Md. App. at 169-70 (du- eling economists valued a homemaker’s inability to work around the house be- tween $162,500 and $270,900). When an economist calculates the value of household services, the plaintiff is asked to estimate the percentage loss experi- enced in a variety of categories of work around the house, such as cooking and meal clean up, house cleaning, home re- pairs, gardening, yardwork, child care, and shopping. The economist then applies the estimated percentage reduction to na- tional data that has determined the value of the average time spent by members of a household in the various work catego- ries that are normally done in the home. In wrongful death cases, the percentage loss in each category is 100%, since the decedent no longer performs any work around the house.
One commonly used set of national data has been compiled in The Dollar Value of a Day: 1996 Dollar Valuation, by Kurt V. Krueger and John O. Ward, Shawnee Mission, Kansas, 1998. To ob- tain the value or cost of providing the household services, the authors multi- plied the amount of time devoted to each household task by the average wage rate that had to be paid to hire a person to perform the relevant task. The study breaks the estimates down by, inter alia, gender, marital status, the amount of people in the household, and whether the
Trial Reporter
individual is working outside the home. For example, the average wife and mother who does not work outside the home typi- cally spends much more time on household jobs than does a single woman or a husband and father who works out- side the home. For individuals who work outside the home, the time devoted to jobs around the house typically increases upon retirement.
This statistical method is
regularly used and relied on by econo- mists, and generally accepted by the Maryland courts, although the approach may undervalue the loss of an individual who performed an unusually large amount of work around the home, The second method of valuing house- hold losses recognized by the Maryland courts is testimony by an individual fa- miliar with the average wage of workers needed to replace the household services that are no longer performed around the house. For instance, in Industrial Service Co. v. State, 176 Md. 625, 635, 6 A.2d 372, 376 (1939), an employee of the State Employment Services was allowed to tes- tify to the usual and customary charges of housekeepers. In Sun Cab Co. v. Walston, 15 Md. App. 113, 142-43, 289 A.2d 804, 820-21 (1972), aff ’d, 267 Md. 559 (1973), an operator of an employ- ment agency was allowed to testify regarding the value of the household ser- vices no longer performed. InHughes v. Carter, 236 Md. 484, 486-87, 204 A.2d 566, 568 (1964), the Plaintiff was allowed to testify to the wages that she had earned when she performed day work for other households. Under either valuation method, household service loss calculated over the course of a plaintiff’s lifetime can often prove significant.
Household Service Loss Not Subject To The Maryland Cap On Non-Economic Damages.
Maryland law is clear that a jury award for loss of household services is a pecuni- ary loss and not subject to the Maryland cap on non-economic damages. United States v. Searle, 322 Md. 1, 6-7, 584 A.2d
Fall 2001
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